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COSTA MESA, CALIFORNIA – February 20, 2014 – ISC8® Inc. (OTC: ISCI), a provider of intelligent cybersecurity solutions and supporting technologies, today reported unaudited results of its fiscal 2014 first quarter ended December 31, 2013. 

Consolidated total revenues for the three months ended December 31, 2013 and 2012 were $93,000.  Net loss from continuing operations decreased $817,000 to approximately $513,000 for the three months December 31, 2013 compared to $1.3 million loss for the three months ended December 31, 2012. The decrease in continuing operation net loss for the three months ended December 31, 2013 as compared to 2012 was largely due to gain from changes in fair value of derivative instruments and gain in extinguishment of debt offset by higher interest expense associated with higher debt.

 Excluding non-cash charges for changes in fair value of derivative liability, non-cash interest expense, stock-based compensation, depreciation and amortization, and net loss from discontinued operations, non-GAAP net loss was approximately $2.7 million for the three months ended December 31 2013, compared to non-GAAP net loss of approximately $5.9 million for the same period in 2012.  See “Use of Non-GAAP Financial Information” below for important information regarding the Company’s use of non-GAAP financial measures.

Highlights of Events Occurring During Three Months Ended December 31, 2013

  • Magnus Almquist joined our Company and in January was appointed to Head of Worldwide Sales.  Magnus brings over 20 years of experience in leading global sales for technology companies including Stoke, Ericsson, and Redback Networks.

  • We completed a recapitalization that converted most of the Company’s subordinated debt into our newly-issued Series D Preferred Stock or restricted stock, while providing the company with capital to progress on its sales and product development plans.  The Company believes that this new capital structure is more aligned with other small public technology companies and should be more attractive to investors.

  • We expanded our presence in South East Asia by opening an office in Kuala Lumpur, Malaysia to support the projected business opportunities in the region and take advantage of the region’s engineering talent.

  • ISC8 collaborated with NEC to demonstrate the power of its Cyber adAPT® malware detection solutions in a software defined networking (SDN) environment, paving the way for compatibility with the coming generation of network topologies.

  • The Company progressed in its trials of Cyber adAPT with several potential enterprise customers and is integrating the feedback from these trials to deliver a General Availability release of the software by April, 2014.

About ISC8

The Company is actively engaged in the design, development, and sale of cyber-security products and solutions for government and commercial enterprises. The Company provides hardware, software and service offerings for web filtering, deep packet inspection with big data analytics, and malware threat detection for advanced persistent threats (“APTs”).  The Company’s products are installed in nation-wide deployment within the Middle East, and in mobile operators in Europe and Asia Pacific.  The Company is focused on delivering comprehensive security solutions, with strategic emphasis on cybersecurity, in order to provide complete visibility on mission-critical networks, and mitigation of new threats as they emerge.  ISC8 was founded in 1974 and is headquartered in Plano, Texas. For more information about ISC8 visit


Statements in this press release that relate to future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ are identified in our public filings with the Securities and Exchange Commission (SEC), and include the fact that we have disclosed that you should not rely upon our previously published financial statements and the fact that we have not filed all of our reports required by the Securities Exchange Act of 1934. More information about factors that could affect our business and financial results are included in our public filings with the SEC, which are available on the SEC’s website located at

The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

Use of Non-GAAP Financial Information – ISC8 reports net loss in accordance with accounting principles generally accepted in the United States (“GAAP”) and supplementally on a non-GAAP basis.  The Company’s presentation of non-GAAP net loss attributable to the Company in this press release excludes the impact of changes in fair value of derivative liability, non-cash interest expense, stock-based compensation, depreciation and amortization expense and net earnings from discontinued operations.  Stock-based compensation expense primarily includes the impact of stock options issued by the Company and stock contributions to the employees’ retirement plan.  A reconciliation of these GAAP and non-GAAP financial measures for all periods presented is found in the attached “Unaudited Reconciliation of Non-GAAP Adjustments.”

ISC8 believes that the presentation of non-GAAP net loss provides useful supplemental information to management and investors regarding financial and business trends related to the Company’s financial condition and results of operations.  The Company also believes that examination of non-GAAP net loss can facilitate consistency and comparability among and between prior periods, as well as comparison with other companies that present similar non-GAAP financial measures.  However, the Company’s presentation of non-GAAP information is not necessarily equivalent to non-GAAP measures presented by other reporting companies and should be considered in that context.  The Company’s management generally uses non-GAAP loss to evaluate the Company’s operating performance because management believes that the exclusion of the non-cash items described above, in the changes in the fair value of derivative instruments, provides insight into the Company’s core ongoing operating results, particularly from a cash generation or use perspective, and underlying business trends affecting the Company’s performance.  ISC8 has chosen to provide this non-GAAP information to investors to enable them to perform additional analyses of past, present and future operating performance and as a supplemental means to evaluate the Company’s ongoing core operations.  The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

For more information on ISC8 and its products, visit